Despite evidence that organic cropping systems in the Midwest can be more profitable than
conventional systems, only a small percentage of cropland has been certified as organic. This
paper models the decision to transition to organic crop production as a dynamic programming
problem in which investment is reversible but includes sunk costs. Results indicate that the risk
and unrecoverable costs associated with organic transition lead to a significant option value, and
this provides a partial explanation for low transition rates in the baseline scenario. Sensitivity to
expected organic yield and price levels is explored, as are the costliness of reverse transition and
the short-term effect of high conventional return levels.